According to Falcoon, an artist who worked for SNK Playmore during the development of this game, the Devil May Cry protagonist Dante was intended to be a hidden character during the very early planning stages, but then became rejected from the roster in favor of Demitri Maximoff, because the designers felt that he would be a more-fitting rival to Leopold Goenitz.
Many of the new sprites for the Capcom fighters were traced over sprites from Street Fighter II, such as Ryu, Ken and Akuma. Balrog's sprite however was traced over Heavy D!'s sprite from The King of Fighters '98. Hugo's however was traced and recycled from his Street Fighter III appearance. For the SNK cast, the sprites are mostly recycled except for Kyo (who had new attacks in his '99 appearance adapted and backported into his '94-'97 appearance), Takuma, and other KOF characters. Genjuro's was redrawn from his Samurai Shodown IV appearance, adapted for KOF style, while Shiki, Athena and Earthquake is all-new.
Some unused intro sprites of Ryo suggest that King may have been planned to be in this game much like in the previous Capcom vs SNK entries. King was scrapped in favor for Kasumi Todoh, wanting a diverse roster with one character that represents Art of Fighting 3 (1996), alongside Takuma Sakazaki representing Art of Fighting 2 (1994), as well as Ryo Sakazaki representing Art of Fighting (1992).
Honki ni Natta Mr. Karate pays homage to his original counterpart in Art of Fighting (1992), as well as to his first win quote ("Unless you master the Haoh Shokoken, you will never beat me") various times, having it as a round quote in SVC Chaos as well as part of both his Neo Max and his win quote against Ryo in The King of Fighters XIII.
Violent Ken's design and backstory were heavily influenced by Ken's appearance in Street Fighter II MOVIE (1994) as Sennousareta Ken where he was brainwashed by M. Bison. He was designed to be the contrast of how he would be normally, lusting for power just like Evil Ryu, and having no empathy for others, even for the ones he cares about.